FX.co ★ Treasury Yields Fall on Hormuz Reopening News

The yield on the US 10-year Treasury note fell by nearly 7 basis points to around 4.25% on Friday, nearing a one-month low. The move followed news of the temporary reopening of the Strait of Hormuz, which helped ease, at least for now, some inflation fears. Iran’s Foreign Minister, Abbas Araghchi, stated that the strait is now fully open to all commercial vessels for the duration of the 10-day ceasefire.

In turn, oil prices sank more than 10%, leading traders to increase their wagers on Federal Reserve rate cuts this year. Markets are now assigning roughly even odds to a 25-basis-point cut by year-end, up from about a 30% probability on Thursday. This still falls short of earlier expectations of two rate cuts before the conflict intensified.